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AtW
10th September 2011, 21:00
Rising inflation is 'no barrier to more quantitative easing'

Annual inflation on the official measure – the Consumer Prices Index – is forecast to rise to 4.5pc in August from 4.4pc in July.

Scottish Power raised both its gas and electricity prices at the beginning of last month, which is expected to feed through to the CPI.

"The ongoing squeeze in households' real incomes is the worst since the mid-1970s and a major source of consumer disgruntlement," said Simon Hayes, economist at Barclays Capital.

The data, to be published by the Office for National Statistics on Tuesday, will not be welcomed by the MPC which has repeatedly failed to meet its 2pc inflation target.

The situation is expected to worsen further in the coming months with inflation nearing 5pc.

Despite rising inflation, Investec expects the MPC to restart QE as soon as October because the risks to growth are so severe. It has already spent £200bn of newly created money on buying assets, mainly Government bonds.

More from the source: Rising inflation is 'no barrier to more quantitative easing' - Telegraph (http://www.telegraph.co.uk/finance/economics/8754753/Rising-inflation-is-no-barrier-to-more-quantitative-easing.html)

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AtW's comment: and why not, it's not like keeping inflation under control is a written job requirement for Bank of England?

And another thought - Govt bonds offer very low interest rate, so one would assume there is massive demand for them, however if that was the case why would BoE need to print money to buy them?

The way things go I might be forced to buy a house soon :eyes

TimberWolf
10th September 2011, 21:34
Rising inflation is 'no barrier to more quantitative easing'

Annual inflation on the official measure – the Consumer Prices Index – is forecast to rise to 4.5pc in August from 4.4pc in July.

Scottish Power raised both its gas and electricity prices at the beginning of last month, which is expected to feed through to the CPI.

"The ongoing squeeze in households' real incomes is the worst since the mid-1970s and a major source of consumer disgruntlement," said Simon Hayes, economist at Barclays Capital.

The data, to be published by the Office for National Statistics on Tuesday, will not be welcomed by the MPC which has repeatedly failed to meet its 2pc inflation target.

The situation is expected to worsen further in the coming months with inflation nearing 5pc.

Despite rising inflation, Investec expects the MPC to restart QE as soon as October because the risks to growth are so severe. It has already spent £200bn of newly created money on buying assets, mainly Government bonds.

More from the source: Rising inflation is 'no barrier to more quantitative easing' - Telegraph (http://www.telegraph.co.uk/finance/economics/8754753/Rising-inflation-is-no-barrier-to-more-quantitative-easing.html)

--

AtW's comment: and why not, it's not like keeping inflation under control is a written job requirement for Bank of England?

And another thought - Govt bonds offer very low interest rate, so one would assume there is massive demand for them, however if that was the case why would BoE need to print money to buy them?

The way things go I might be forced to buy a house soon :eyes

Is hyperinflation going to cure 'consumer disgruntlement' though? All it seems to doing thus far is pushing cash into real estate, gold, paying off bigger mortgages...and pushing up house prices.

MarillionFan
10th September 2011, 21:35
This thread is 5% less interesting than last month.

Freamon
10th September 2011, 21:59
AtW's comment: and why not, it's not like keeping inflation under control is a written job requirement for Bank of England?

Exactly - it's not.

AtW
10th September 2011, 22:23
Exactly - it's not.

What's the job BoE should do then, please provide 2 references to backup your claim.

TimberWolf
10th September 2011, 22:35
What's the job BoE should do then, please provide 2 references to backup your claim.

Photocopying last month's letter and collecting knighthoods and monster inflation beating pensions?

AtW
10th September 2011, 22:44
Photocopying last month's letter and collecting knighthoods and monster inflation beating pensions?

It's the right answer!!!

Please report to your local police station for ze reward.

shaunbhoy
11th September 2011, 10:55
What's the job BoE should do then

Currently, the job involves explaining why the merely aspirational target of 2% has been breached. If you can provide a good reason,and I am sure we all agree that keeping a sluggish economy growing is undoubtedly a good reason, then it is happy days and keep the money printing presses going.
And if it can be expedited whilst continuing to allow houseprices to rise, and also giving mortgage owners more money in their pocket then so much the better.
The only ones marking time are those too jittery and short-sighted to have climbed aboard the property gravy train. And let's be honest, who really cares about them? They still get to feel part of it all by paying their landlord's mortgage for them.

HTH

:wink

AlfredJPruffock
11th September 2011, 17:20
C
The only ones marking time are those too jittery and short-sighted to have climbed aboard the property gravy train. And let's be honest, who really cares about them? They still get to feel part of it all by paying their landlord's mortgage for them.

HTH

:wink

Vintage stuff SB !

Freamon
11th September 2011, 21:59
What's the job BoE should do then, please provide 2 references to backup your claim.

http://www.legislation.gov.uk/ukpga/1998/11/section/11


11 Objectives.In relation to monetary policy, the objectives of the Bank of England shall be—(a)to maintain price stability, and(b)subject to that, to support the economic policy of Her Majesty’s Government, including its objectives for growth and employment.

http://www.legislation.gov.uk/ukpga/1998/11/section/12


12 Specification of matters relevant to objectives.(1)The Treasury may by notice in writing to the Bank specify for the purposes of section 11—(a)what price stability is to be taken to consist of, or(b)what the economic policy of Her Majesty’s Government is to be taken to be.(2)The Treasury shall specify under subsection (1) both of the matters mentioned there—(a)before the end of the period of 7 days beginning with the day on which this Act comes into force, and(b)at least once in every period of 12 months beginning on the anniversary of the day on which this Act comes into force.(3)Where the Treasury give notice under this section they shall—(a)publish the notice in such manner as they think fit, and(b)lay a copy of it before Parliament.

Where is inflation mentioned?

AtW
11th September 2011, 22:08
Where is inflation mentioned?

Here:

"One of the Bank of England's two core purposes is monetary stability. Monetary stability means stable prices - low inflation - and confidence in the currency. Stable prices are defined by the Government's inflation target, which the Bank seeks to meet through the decisions taken by the Monetary Policy Committee."

Source: Bank of England | Monetary Policy (http://www.bankofengland.co.uk/monetarypolicy/index.htm)

TimberWolf
11th September 2011, 22:28
Here:

"One of the Bank of England's two core purposes is monetary stability. Monetary stability means stable prices - low inflation - and confidence in the currency. Stable prices are defined by the Government's inflation target, which the Bank seeks to meet through the decisions taken by the Monetary Policy Committee."

Source: Bank of England | Monetary Policy (http://www.bankofengland.co.uk/monetarypolicy/index.htm)

:rollin: Yeah, confident it's fubared.